shimself
Member of DD Central
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Post by shimself on Apr 9, 2019 15:53:29 GMT
I don't understand what the lending partner (H***f) gets out of this arrangement.
They get the junior loan, so if it goes wrong they suffer before we do. It doesn't enhance their security. So why do it?
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Post by gravitykillz on Apr 9, 2019 16:13:15 GMT
Commision ? Equity in loanpad ?
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jester
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Post by jester on Apr 9, 2019 16:43:55 GMT
Loanpad answered this precise question on page 2 of their other thread but for ease here it is, directly quoted "There are many reasons a lending partner may want to work with Loanpad. This is essentially many of the same reasons a lending business would want to seek leverage to expand – however with our structure there is no leverage as loans are simply shared. We will try to illustrate this with an example:
A Typical Loan
Loan amount £1m
Security Value £1.5m
Term 12 months
Rate 10% per annum
Lender ROCE 10%
Capital £1m
Loanpad Structure
Senior Tranche A £750,000 @ 7%
Junior Tranche B £250,000 @ 19%
Lender ROCE 19%
Capital £250,000
So by working with Loanpad, lending partners have the ability to:
1. Increase their return on capital.
2. Increase their funding capacity.
3. Reduce rates to attract top borrowers.
For Loanpad investors, it is a lower-risk proposition as the risk of loss given default is highly mitigated/sheltered by the Junior Tranche. So it is because of the additional protection and stability that the rates are lower.
To answer your other question, there are currently 5 live loans on the platform and about 10 in the pipeline. We also have several new lending partners ready to work with our structure as soon as there is sufficient capacity to do so. It is a bit premature currently as we only just launched."
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shimself
Member of DD Central
Posts: 2,561
Likes: 1,170
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Post by shimself on Apr 10, 2019 14:31:18 GMT
Loanpad answered this precise question on page 2 of their other thread but for ease here it is, directly quoted "There are many reasons a lending partner may want to work with Loanpad. This is essentially many of the same reasons a lending business would want to seek leverage to expand – however with our structure there is no leverage as loans are simply shared. We will try to illustrate this with an example:
A Typical Loan
Loan amount £1m
Security Value £1.5m
Term 12 months
Rate 10% per annum
Lender ROCE 10%
Capital £1m
Loanpad Structure
Senior Tranche A £750,000 @ 7%
Junior Tranche B £250,000 @ 19%
Lender ROCE 19%
Capital £250,000
So by working with Loanpad, lending partners have the ability to:
1. Increase their return on capital.
2. Increase their funding capacity.
3. Reduce rates to attract top borrowers.
.... Apologies for having missed it, thanks. But at the same time their risk is higher But fine. I'm in
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